CITY OF MARSHALLTOWN
CASH MANAGEMENT POLICY AND
PROCEDURAL MANUAL
Original Publication: August 12, 1996
Revised: June 26, 2000
Last Revised: August 16, 2006
TABLE OF CONTENTS
Page
1. Objectives of this Policy. ......................... .................................... ...................3
2. Introduction. ................................................................................. ...................6
2.1 Overview. ...................................................................................................6
2.2 Types of Municipal Funds. ........................................................................8
3. Cash Receipts and Receivables. ...................................................................13
3.1 Internal Control. .......................................................................................13
3.2 Receipt Payment Processing. ..................................................................16
3.3 Bad Checks..............................................................................................19
3.4 Billed Accounts Procedures. ....................................................................19
Write-Offs.......................................................................................................23
4. Internal Control for Investments and Banking Services. ................................24
5. Disclaimer Concerning Ordinance Sections...................................................27
Guidelines for Delinquent (Non-Parking).
All Accounts. ..................................................................................................27
Rental Registration or Inspection Fees. .........................................................28
Licenses & Permits. .......................................................................................28
False Alarms. .................................................................................................28
Nuisances. .....................................................................................................29
Rent Assistance Promissory Notes................................................................29
Miscellaneous Undesignated. ........................................................................29
Glossary .............................................................................................................30
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1 - OBJECTIVES OF THIS POLICY
The Finance Department is responsible for the compliance and implementation of the
following items:
Legal Requirements:
• Comply with federal, state and local laws, to include, but not limited to, 1099’s
and W-2’s.
• Uses Generally Accepted Accounting Principals (GAAP) while preparing the
Comprehensive Annual Financial Report (CAFR)
• Adheres to state statutes concerning appropriations and expenditures, and
fund classifications i.e., Road Use Tax, Grants, Employee Benefits, Business
type fund and other public trust funds
• Insures legal publication compliance for annual Financial Reports, Budget,
Amendments, Bond Sales, Audits or any other publications as may be
required from time-to-time.
Money Management:
• Facilitates preparation of annual operating and multi-year capital budgets
• Determines cash flow based on revenues, current and future budgeted
needs, spending trends, and debt retirement
• Maximizes interest earnings through approved, competitively bid investments
• Pays all expenses of the City as approved by the Council
• Manages cash allocations to the Capital Plans and Cash Reserve funds as
approved by Council
• Oversees Administrators of Deferred Compensation Plans (ICMA and
Equitable)
• Reconciliation of checks written, ACHs, wires and deposits made
• Monitors all cash transactions for internal safety and accounting integrity
• Negotiates bank competition and service contracts. Contracts are
competitively bid and have established the availability and fee structure for
banking services which has proven beneficial to the City.
• Monitors all financially related transactions
Budget Administration:
• Prepares budget vehicle for department head preparation to facilitate ease
and flexibility without sacrifice to data integrity
• Facilitates preparation of revenues
• Prepares expenditure budgets for: Finance, Data Processing, Economic
Development, Debt Service Funds, General and Tort Liability Insurance, the
City’s liabilities for Social Security, Medicare, IPERS, Group Health, Life,
Occupational Insurance, Police & Fire Retirements and Pension systems,
also some Trust Funds, Central Stores, Printing General Government and
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City Council activities. Prepares wage and benefit funding levels for all
departments
• Processes all other department’s expenditure requests
• Prepares documents for Council review and approval of budget
• Monitors all departmental budgets for compliance during the fiscal year,
making recommendations to Council concerning shortfalls in revenues or
over-spending
• Prepares and presents public information and education for general
population, high school and university students, civic groups and the internet.
Accounts Receivable:
• Oversees accounts receivable, facilitating and monitoring billing, collection
and receipting monies from: tax collections, rentals, licenses & permits, user
fees, rents, fines, intergovernmental grants, interest income, donations,
special assessments, sales taxes and parking tickets
Accounts Payable:
• Pays all bills for activities in all funds of the City
• Prepares distribution of approval reports for all departments
• Prepares 1099 forms as required by federal law
• Maintains good public relations with vendors
• Prepares list of bills for Department Heads, Council and publications
• Insure compliance with City Purchasing Policy and procedures
Payroll:
• Maintains employee payroll records to insure proper pay, deduction
processing, union contract and personnel manual compliance
• Pays employees bi-weekly based upon time sheets approved and submitted
from each department
• Processes federal and state taxes, voluntary deductions (i.e., savings bonds,
credit union, deferred comp, wage assignments), supplemental compensation
(i.e., clothing allowances, EMT bonus), and garnishments
• Prepares all federal and state reports (i.e., 941, W-2’s, IPERS, Census
Bureau)
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Insurance:
• Maintains insurance coverage for general, liability and bonds city wide
• Maintains location, cost and coverage records for facilities, road equipment,
park equipment, vehicles, etc.
Data Processing:
• Provides and maintains functional hardware and software programs to
process all payables, receivables, payroll, general ledger, fixed assets,
budgetary reporting, special reporting, data base, spreadsheet, word
processing and associated operating system software.
• Facilitates access on network and accounting computer for all departments
• Trains users on current software for accounting and network applications
• Gives daily attention to validating input/output, back-up procedures,
operations analysis and troubleshooting
• Seeks out and selects additional software/applications to efficiently achieve
the goals of the department
General Accounting:
• Generates reports for Mayor, Council, citizens and all departments
• Prepares all audit schedules in anticipation of required annual examinations
• Maintains buildings, vehicles and equipment and furniture as fixed assets
• Manages disposal of asset records
• Prepares depreciation schedules for all capitalized assets
• Compiles necessary financial reports for various grants and 28E Agreements
• Generates reports for all financial aspects to other agencies, i.e.: investments,
group health insurance, actuarial, etc.
• Adheres to the retention policy of financial documents through electronic
means and/or the safe keeping of physical documents
• Insures that all employees handling cash or checkbook activities are absent
from their duties for at least five consecutive days during each year.
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2 - INTRODUCTION
2.1 Overview
OVERVIEW
Internal control represents an organization’s plans, methods, and procedures used to
meet its missions, goals, and objectives and serves as the first line of defense in
safeguarding assets and preventing and detecting errors, fraud, waste, abuse and
mismanagement. Internal control provides reasonable (not absolute) assurance that an
organizations’ objectives are achieved through 1) effective and efficient operations, 2)
reliable financial reporting, and 3) compliance with laws and regulations.
This internal control/cash management policy is in compliance with the Investment
Policy of the City of Marshalltown. It is, however, to compliment the Investment,
Purchasing, Debt Management and any other policies relating to the fiscal management
of the City, and it does not supersede them. It is very important that these policies are
not substituted for the commitment, on the part of all staff handling any City assets, to
prudent management, sound judgment, knowledge and experience. All officials dealing
with cash shall be insured and/or bonded. Effective upon approval by the City Council,
this policy shall be reviewed by the external auditors annually to insure its completeness
and implementation of internal controls are exercised for the timely receipt of and the
safekeeping of all funds for the City of Marshalltown.
The establishment and maintenance of a good internal control system helps to ensure
the integrity of the financial reports and assist the officials responsible in maintaining
custody over assets (both cash and capital assets). In addition, a good internal control
system may increase the external independent auditor’s reliance on the system; which
can result in a decrease in the amount of substantial testing. Managing cash is neither
as simple, nor as narrow as it may seem. The scope of cash management ranges from
specific cash management tools for cash collections and cash disbursements to the
identification and planning of needed funds, and the investment of idle funds all within
the scope of bond covenants, federal regulations, state statutes, local policies and
prudent judgment.
In most governmental organizations, it is the financial officer’s responsibility for the
financial activities of the governmental unit, including cash management and the
maintenance of an adequate system of internal control. The financial officer must:
• Identify potential financial errors or irregularities which might occur.
• Systematically document and evaluate the existing systems of internal control
throughout the governmental unit and identify significant instances of under or
over-controlled, cumbersome practices.
• Identify and articulate the factors to consider in assessing the practicality of
suggested system improvements, and initiate revisions in law or policy to
improve the control system.
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• Identify potential revenue sources and efficiencies to reduce or optimize
expenditures.
• Monitor revenue collections and disbursements (see Purchasing Policy for
disbursement guidelines).
• Manage bank accounts and cash management products and services. This
includes bank selection, working relations and negotiating service fees.
• Insure liquidity forecasting and management.
• Account for and control bank accounts, investments, budgets and financial
forecasts (long-range planning).
• Manage debt. This includes monitoring for prudent debt ratios, decisions to
borrow from banks or to issue debt instruments, negotiation of debt terms and
repayment sources.
To insure that all of these objectives are met is ultimately the responsibility of the City
Council. Through monthly financial and budget reports, not less than quarterly
meetings of the Investment Advisory Committee and the annual audit, the Council can
insure compliance and continued financial stability for the City.
WHAT ARE THE SOURCES AND USES FOR CITY FUNDS?
Normally, the current year’s budget receives the limelight. However, not all cash
belonging to the City is intended for immediate use. Some expenditures project into the
future. Usually these are capital by nature, either in infrastructure projects or
equipment. The City has undertaken policies initiating funding the aforementioned
items and created reserves.
Cash is segregated into separate funds in compliance with state statute and various
accounting standards such as operating funds and project or pension funds. In addition
to different purposes, certain funds have different restrictions, such as bond covenants,
pension and trust funds.
Even though the purposes and restrictions may apply to City funds, important
distinctions should be made about the timing needed for funds to be available.
Operating funds require the cash to be available within any current fiscal year. Reserve
funds, or pension funds, on the other hand, may not be needed for many years to come.
The income generated by these long term cash funds is much more important than in
the operating funds.
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2 - INTRODUCTION
2.2 Types of Municipal Funds
TYPES OF MUNICIPAL FUNDS
General Fund - This fund is used for the regular operating expenditures of the City,
i.e., Police, Fire, Library, Administration, Park & Recreation and Public Works wages
and benefits.
The timing of the income and expenses is the most difficult management of this fund.
The most dependent income for this fund is from property taxes, which traditionally
come in large quantities in October and April with minimal revenues during every other
month. The City is continually studying ways to be less dependent upon property taxes,
examining user fees and revenues from other state and federal sources. This practice
should be continued. Political pressures from the state and federal levels have
influences on the demand for these funds (unfunded mandates) and control on how
they are collected and distributed (tax credits which are not reimbursed) to the City.
Cash management focuses on bridging gaps between inflows and outflows. By
monitoring budget income and expense, forecasting the timing of future cash inflows
and outflows, accelerating collections, managing disbursements and maintaining the
safety of principal, the City can reduce and control the gap between inflows and
outflows. Controls must be consistently administered to insure that money is not tied up
in an investment when needed for payroll or invoice payments. The General Fund
should not become dependent upon investment interest. Income from idle monetary
assets should be a secondary goal;, preservation of principal and liquidity should be
primary.
Cash Flow Reserve Funds - The City has created a fund which would be used
specifically to accumulate funds sufficient to bridge the gaps between inflows and
outflows of cash for all City funds. An ordinance has been adopted which identifies
funds for deposit into this Cash Reserve Fund, the accumulation of interest earnings,
uses and projections upon reaching the goal of 15% of the expenditures of the General
Fund Operating Budget. The savings from refunding bonds and 5% of the Local Option
Tax, from the first election has been designated for this cash flow reserve fund.
Investments for this fund need to preserve principal with a great deal of monitoring for
liquidity as needs arise. For purposes of the Comprehensive Annual Financial Report
(CAFR), this fund shall be classified as part of the general fund, but is designed to
assist in the cash flow of the general checking account.
Capital Improvement Fund - This fund was created to reflect capital expenses for
equipment and facility maintenance items for activities of the General Fund.
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2 - INTRODUCTION
2.2 Types of Municipal Funds
; The funding source is a transfer from the Capital Improvement Levy (receipted under
Capital Project Funds) begun July 1, 2000 after a referendum; and 5) any other funds
identified by the Council for this purpose. For the purposes of the Comprehensive
Annual Financial Report (CAFR), this fund shall be classified as part of the General
Fund.
Coliseum Fund - This fund was created to easily monitor the activities and costs
associated with the Coliseum. The funding sources have been a portion of winter
athletics fee earmarked for the Coliseum upkeep and a transfer from the General fund
to cover expenses not covered by rentals. For purposes of the Comprehensive Annual
Financial Report (CAFR), this fund shall be classified as part of the general fund.
Special Revenue Funds - The revenue source for this type of fund is principally from
other governments and/or has very tight restrictions upon it. Examples of special
revenue funds are: federal programs such as Rent Assistance, state programs, such as
Road Use Tax, or grants such as CDBG or Police Grants. Certain tax levies, by state
statute, are required to be deposited into a special revenue fund. To reimburse the
budgeted activity area for these expenses, cash is transferred to the general fund.
Generally, special revenue funds are considered operating and are appropriated by
Council action on a project or need basis with no accumulation or long-range purpose.
Current practice transfers these funds providing the appropriate operating fund the
necessary cash flow to sustain operating expenditures and accumulate appropriate
interest on idle funds. It is recommended that this practice be continued upon adoption
of this policy. Investments of these funds shall adhere to the same restrictions/purpose
as the principal. Generally, grants monitored in these funds require requisitions before
funds are available. City staff must insure timely filing of financial reimbursement
requests to secure needed funds. If the finance department is not responsible for this
filing, a copy of the filing must be copied by the responsible department and forwarded
to finance
Capital Project Funds - Capital expenditures in this area are for planned construction
projects. Currently, the budget for these projects must exceed $25,000 before an
independent fund is established. Upon Council acceptance of the project, a fund (or
project number) can be created for monitoring and compliance purposes. Revenue
sources for these expenditures may be special assessments, bond issues, federal
and/or state grants or funds set aside from other operating budgets. Funds must be
available as needed to avoid costly borrowing for interim financing. Thus, the cash flow
forecasts, liquidity and safety of principal must be primary considerations. Generally,
grants used for capital projects require requisitions before funds are available. City staff
must insure timely filing of financial reimbursement requests to secure needed funds. If
the finance department is not responsible for this filing, a copy of the filing must be
copied by the responsible department and forwarded to finance.
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Another type of capital fund is for the planned replacement and purchase of municipal
equipment and capital building maintenance. Funds may accumulate for 2 to 10 years
before they are needed. For this fund type, liquidity is predictable based upon the
Capital Improvement Plan prepared as part of the budgeting process.
2 - INTRODUCTION
2.2 Types of Municipal Funds
Investment income is often a very important funding source for the replacement of
existing equipment. Through an election in November, 1999, the City can levy
$.67/$1,000 of taxable valuation to fund these improvements. A subsequent resolution
designated 15% of these funds to be accumulated for large capital acquisitions.
Debt Service Funds - These funds are used for the retirement of outstanding notes or
bonds and their associated interest and debt expenses (i.e., registrar fees).
Traditionally the revenue source for this fund is property taxes or designated user fees.
These may be requirements under the terms of outstanding bond indenture
agreements. The time when the funds will be needed is known fairly accurately. If
investment interest earnings are accumulated, it is considered a portion of the funds
that will be available to retire the debt. The safety of principal is crucial when dealing
with debt service funds. Expenditures of debt service funds are directly related to the
issuance and retirement of the debt. Constant market monitoring may reveal possible
savings through refinancing or restructuring of outstanding debt. All bonds and coupons
are registered with a registrar and paid through that agent. Many bond sales are now
done through book entry only, and no physical bond is produced. It is paramount that
accurate, reliable information is maintained by the registrar to insure the timely
payments of bonds and their associated interest. Annual reporting requirements must
also be met to all bond holders. Failure to do so would jeopardize the credit of the City.
Tax Increment Financing debt pledges property taxes from newly created taxable value
for the retirement of principal and interest. When incurring and structuring debt of this
type, care should be taken to insure sufficient revenue growth will occur to retire the
debt and related expenses.
Debt used to finance enterprise projects should demonstrate sufficient user’s fees are
available to support the debt and related expenses. Often, bond covenants will require
additional reporting and levels of reserves to be maintained and properly demonstrated
annually.
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Retirement and Pension Funds - These funds have two important differences from all
other funds. First, the majority of the responsibility has been transferred to the state
Police and Fire Retirement System (Iowa Code 411). The provisions for the pension
funds (Iowa Code 410) will terminate through the attrition of all grandfathered-in
participants. Property taxes and interest earnings are the only revenue sources for
these funds. Again, taxes can only be assessed on an as-needed basis. Within
Marshalltown, residual funds
2 - INTRODUCTION
2.2 Types of Municipal Funds
from the City-managed Police and Fire Retirement System prior to 1992 have been
designated to pay the City’s share of the assessments. As these funds are depleted,
the Council has phased in the use of property taxes. (For more details see the debt
service policy).
Surplus, Emergency or Contingency Funds - At the time of this writing, the City is
not in a financial position to accumulate reserves that are not earmarked for a specific
use. The purpose of these funds could be to cover shortfalls caused by receipts that
are a bit short of budget projections or emergency expenditures. Secondly, surplus
funds accumulated when the economy is booming and revenues are strong, can help
cover expenditures during recessions when revenues decline. Caution should be
exercised to insure that the accumulation of such funds does not create an unwarranted
burden on the taxpayers.
Enterprise Funds - These funds are for the sole support of self-funding activities such
as transit or water pollution control. It is the goal of this fund group to be fully self
funded from user fees and direct grants. This fund type should contain operating,
capital expenses and reserves for the exclusive use of the enterprise. (Start up funds
were advanced for the creation of the Transit operation. (See separate resolution dated
5-96 concerning the repayment of contributed capital to the general fund from the
Transit enterprise fund).
Internal Service Funds – This is an account for group insurance benefits, occupational
insurance benefits, flexible benefits, and worker’s compensation benefits provided to
other departments on a cost reimbursement basis.
Pension Funds – This fund is used for pensions of disabled and retired police as
provided under Chapter 410 of the Code of Iowa.
Agency Funds – These funds are used as a clearing account for cash resources
collected by the City for distribution to the authorizing recipient. For example, sales tax
due to the state, or funds held for Friends of the Library.
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3 - CASH RECEIPTS AND RECEIVABLES
3.1 - Internal Control
INTERNAL CONTROL
Proper control of cash and receivables is very important to the City. This is especially
difficult (particularly with a limited staff) because a true segregation of duties and
establishment of internal controls requires a clear-cut separation of activities. This is
very challenging when responsibilities are shared. Without proper controls and policies,
cash can be easily misappropriated; therefore, in accordance with good internal control,
the following procedures need to be monitored and control must be established.
RECEIPT NUMBERING - All receipts must be pre-numbered, out of the control of those
receiving cash or cash equivalents.
CASH DEPOSITS - Not less than daily, the City Clerk or the Clerk’s designee, shall
deposit all receipts of the City in accounts designated for such purpose in legal
depositories, authorized by the City Council.
SPECIAL DEPOSITS - All special deposits or amounts in excess of $5,000 shall be
deposited the same day as received, unless received after two o’clock (14:00 hours), in
which case the deposit shall be placed in the night deposit box of the bank for safe
keeping to be deposited in the morning.
DIRECT DEPOSITS - ACH REMITTANCES. THIS IS A FORM OF ELECTRONIC
FUNDS TRANSFER (EFT) - Revenues due to the city such as property taxes, Road
Use Tax Allocations, HUD payments or grant programs may be deposited directly into
the accounts of the City with authorization of the City Treasurer/Finance Director and
the respective agency. This method of fund transfer can be initiated by either the payer
or the City. This transaction may incur some expense from the bank and bookkeeping
departments. (Currently, the banking agreement does not assess any fees for this
service)
CREDIT CARD REMITTANCES - Payments for services may be accommodated using
credit card remittances for the payer’s convenience when paying fines, purchases, etc.
This method can reduce remittance, processing and bank float. The drawback to his
method of payment is that the surcharge cannot be passed on to the payer if those
paying by other methods are not assessed the added charge.
SEPARATION FROM DUTIES. Each employee who handles cash or has the ability to
process payroll. accounts receivable or accounts payable must be removed from those
duties for at least five consecutive days each year. This is usually done during
vacations.
3 - CASH RECEIPTS AND RECEIVABLES
12
3.1- Internal Control
This mechanism can also be used for disbursements, i.e., automatic deposits for
payroll or rent assistance payments. ACH was designed as a cost-effective
replacement for checks.
WIRE TRANSFERS - With the wire transfer, only the payer can originate the
remittance. The advantage to a wire transfer is its availability the same day. The
disadvantage is the expense. Banks often charge a fee to initiate each wire and
another fee from the receiving bank. Due to limits and regulation of the Federal
Reserve, time limits are imposed making only morning transfers practical. ACH should
be the method of choice with advance planning.
NIGHT DEPOSITS - Remote locations such as the swimming pools and compost
facilities will be required to take daily receipts to the night deposit box of the banking
institution designated for this purpose. The transit division is required to make, at a
minimum, weekly deposits. This procedure will be followed to insure the safety of city
receipts and to facilitate the bank deposit.
3 – CASH RECEIPTS AND RECEIVABLES
3.2 Receipt Payment Processing
CENTRALIZED COLLECTION POLICY
The more focused the City collection can be into one centralized collection point, the
more efficient collection can become. All departments must use this centralized
collection for funds due to the City unless specifically exempted such as the library and
parks and recreation fees. Advantages of a centralized collection program include:
Less confusion for the public;
Dedicated staff whose primary function is to collect monies due to the City.
This person is familiar with City policy and fee schedules;
Consolidation of accounts that combines debts of one citizen or customer
from several departments, centralizes information on the customer or citizen
who may use various names, company names or other related parties;
Facilitates information collection on citizens or groups with poor payment or
City service abuse histories, possibly preventing another collection problem,
i.e., staff can monitor credit or rental histories on individuals or groups
requesting permits, rent on facilities or other City services;
3 – CASH RECEIPTS AND RECEIVABLES
13
Receipt Payment Processing
Economies of scale (i.e., more than one delinquent bill with the City from
different departments) can increase efficiency which makes the use of credit
reporting services feasible and worthwhile; prevents other departments from
setting up payment schedules or other payment arrangements which need to
be monitored for compliance; and referring accounts to the collection staff or
agency on a more timely basis;
Decreases turn-around time from receiving department (point of collection) to
point of deposit (into the bank);
Gives the City the ability to compare funds owed to debtor for services
provided to the City to pay for outstanding balances.
Gives the City the ability to initiate the payment to itself. An example of this
occurs when the City reaches out each month and electronically taps its
customer’s bank accounts on a prearranged, pre-approved basis. This is an
automated clearing house (ACH) debt.
Allows the City to accept credit card payments at pre-approved sites only
(City Clerk and Park & Recreation).
One of the biggest drawbacks of the centralized collection point is the need for support
from the City Administration and the cooperation from all departments to invoice debt
due the City in a timely manner. In addition to the centralized billing and collection for
services and materials, additional assistance, such as legal staff and collection agencies
must be considered as part of a comprehensive collection policy.
PAYMENTS BY MAIL - A monitoring mechanism must be in place to safeguard the
funds (cash and checks) which are received by any City department. Based upon
recommendations of the external auditors, a person, independent of those receipting
the money should be responsible for opening the mail and periodically create a log of
cash and checks received to compare with the receipt of the day to insure complete and
accurate receipt processing.
IN-PERSON CASH PAYMENTS - This procedure requires the immediate receipting of
the payment into the cash register system, as the payer is standing at the counter. It is
important that all information is available to quickly and accurately credit the customer in
an efficient and friendly manner.
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3 – CASH RECEIPTS AND RECEIVABLES
Receipt Payment Processing
To insure accuracy in receiving cash, staff alternates reconciling the cash drawer. In
addition to alternating the procedure known as ‘closing the drawer’, care should be
taken to enter the amount contained in the drawer (i.e., how many pennies, nickels,
dimes, etc.) before the activity report is generated by the cash register. The activity
report displays the amount of cash and checks taken in during the business day. If the
person ‘closing the drawer’ enters the denomination of cash, checks and coins, the
second person of the office should run the cash register summary report and verify that
they match. All discrepancies over a tolerable limit should be reported to the Finance
Director/City Treasurer. A tolerable limit as of the adoption of this Policy shall be 1% of
the petty cash balance held by the City Clerk. Each office should be sure to monitor the
level of petty cash activity to insure sufficient funds to make change. This amount is
recorded within the Finance Department.
The City has established a consolidated bank account or “central depository”. All cash
and checks are deposited into that account. to limit fraud. Separate accounts have
been created for transactions dealing with the use of credit card receipts and outside
agencies debiting or crediting an account of the city.
The use of a central depository:Requires that sufficient accounting records be
maintained to provide reporting of cash balances for each fund of the City;
Permits the concentration of cash to obtain large blocks of cash for deposit and
investment purposes
A cash receipt journal and revenue/receivable subsidiary ledger shall be
recorded as part of the general ledger.
3.3- Bad Checks
BAD CHECKS
The return of a bad check shall be sent to Cyber-Collect for collection. Fees associated
with these returned items is collected directly by Cyber-Collect.
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3 – CASH RECEIPTS AND RECEIVABLES
3.4-Billed Accounts (Receivables) Procedures
BILLED ACCOUNTS
The City invoices citizens and customers who have not paid when the transaction has
not been paid when due.Payments shall be allowed by cash, check, credit card ACH or
wire transfer.
Payment for items invoiced can be received by mail or delivery to the Clerk’s office at
City Hall during normal business hours. The Police Department (for police related items
only), Park & Recreation Department (for P&R items only), the library, pools and
compost facility can accept payment for cash sales or services at the respective site.
Payment in full is expected within thirty (30) days from the date the invoice was
originally billed. Many debtors are willing to pay their accounts, however, they may not
be able to pay their accounts in full. In such cases, the City will allow partial payments
with a written payment plan approved by the Finance Director. Arrangements for partial
payments allow debtors to pay what they can, when they can, until the balance is paid
in full, or they may pay a set amount until the balance is paid in full.
Collection of Delinquent Revenues
Delinquent Accounts. Delinquent accounts refer to those accounts that are past due by
a predetermined number of days. The due date varies by the type of account. Some
accounts are due when the license or permit is issued, i.e., building permits. Other
accounts become delinquent thirty days past the invoice date, i.e., parking tickets. All
items invoiced through the City Clerk’s office are delinquent after 30 days from the
original billing date. When an account becomes delinquent, a systematic, aggressive
collection procedure should be implemented according to established policy. Because
delinquent accounts become more difficult and expensive to collect, it is necessary to
encourage prompt payment of all debts due to the City.
For Non-Parking Accounts:
If an account is over 30 days old, the City will no longer consider this amount current
and may begin to pursue a more aggressive approach other than the monthly
statement. Delinquent accounts shall be aggressively pursued through the use of the
following alternatives:
• Stamp the statement “past due” with a sheet included that says one of the
following actions will be taken.
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3 – CASH RECEIPTS AND RECEIVABLES
3.4-Billed Accounts (Receivables) Procedures
• Begin assessing interest based on the guidelines listed above. Any accounts not
paid within 30 days will have interest assessed to their account at one and a half
percent (1 ½%) per month. Interest to other cities will be deferred to sixty (60)
days to allow council approval of expenditures (due to timing differences the
other cities may not meet Marshalltown’s 30-day period). Exceptions to the
interest assessment is allowed for the following reasons: accounts that have
been billed for reimbursement under a federal or state grant program and billings
for the E911 system.
• Revoke the offender’s license until bills are paid in full.
• Net the amount due the debtor by any amount that is owed to the City
• Certify the bill to taxes: If a bill is delinquent for services rendered and can be
assessed to taxes with a reasonable expectation of collection (property is not
likely to be sold at tax sale), the City Clerk shall be directed to submit to the City
Council, a list of such bills to be certified to the taxes. As per the Iowa Code, the
City Council must approve this list prior to certification. It is the intention of the
City to try and recoup the administrative fees incurred. All accounts that are
assessed to taxes will have an administrative charge added to the original
charge.
• Take to small claims court if the amount exceeds $50.00. The Court costs will be
added to the original bill.
• File for a court order for a garnishment or wage attachment for the amount due
plus expenses.
• Cite as a municipal infraction assessing a fine based upon the appropriate code
section.
4 – CASH RECEIPTS AND RECEIVABLES
3.4-Billed Accounts (Receivables) Procedures
• Turn the bill over to a third-party collection agency: City staff is too generalized
to aggressively pursue the collection of delinquent accounts. Therefore, the use
of outside collection agencies is warranted. The use of a collection agency can
benefit from the economics of scale and a dedicated focus on collections. This
method, though proven somewhat effective, does reduce the anticipated revenue
because of the collection fees. All staff should insure that every avenue has
been exhausted for the full amount before using the collection agency.
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• Put the offender on a “hot sheet”. If an individual or business is more than 60
days delinquent in payment (this would give them a total of 90 days from the
original invoice date) of the amount due to the City, their name is added to a list
that will prohibit any future issuance of any license or permit by the City (in
accordance with Section1-12 of the City of Marshalltown Code of Ordinances)
until all accounts are paid. In addition, all future transactions will be on a cash,
certified check or credit card only basis.
• File the overdue account (must exceed $50) with the state for offset from any
income due from the state.
For Parking Accounts:
Thirty days after a ticket is issued, the Finance Department shall see that an invoice is
prepared and mailed to each ticket holder. (See the Parking Ticket Procedure manual
for more detail). At the end of sixty days after a ticket has been issued, the ticket shall
be considered delinquent. Further collection procedures shall be pursued including but
not limited to one of the following options:
The Habitual Violator Law. All vehicles with five or more delinquent tickets will
follow the rules pertaining to this ordinance. Under this law, the City will tow the
offender’s vehicle. The offender has to pay all outstanding fines, an
administrative charge and the towing fee before the individual will get the vehicle
out of impound
2) DMV-Plate Tagging. All license plates with five or more delinquent tickets will
be tagged (flagged) at the Department of Motor Vehicles to insure that renewal
of said license plate will be denied until all parking tickets owed to the City have
been satisfied. At the time of this writing, the funds collected at the DMV are
deposited into a special account designated for this purpose.
1) For parking tickets in excess of $50. All licenses having $50 or more over
due can be sent to the state for offset from any income due from the state.
District Court. When one individual holds five delinquent tickets, or has
accumulated more than $50 in delinquent fines, the City may file a claim with the
Clerk of District Court. Upon conviction, this will create a flag within the County
licensing system, preventing the renewal of automobile licenses until full payment
for the parking tickets is received. Under this method, the City will receive 90%
of the ticket owed.Third Party Collection Agency. If the individual holds tickets
less than $50 or five tickets, and has not made any attempt to pay the unpaid
fines. The City shall certify the delinquent amount to the collection agency for
further action. This method presumes that the City will receive only 50% of the
outstanding amount.
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3 – CASH RECEIPTS AND RECEIVABLES
3.5 Write Offs
Write-Off Policies
In some instances, governments may be compelled to write off delinquent accounts.
Such action usually takes place after all collection efforts have been exhausted and the
account is either considered to be uncollectible or the amount owed is too small to
warrant further collection efforts. The following circumstances will be used by the City
of Marshalltown:
1. Discharged bankruptcy. The account has been discharged through
bankruptcy court and the file has been noted with the date filed, number,
court district, and date of discharge.
2. Wrong Responsible Party. The account was referred in the name of a
company or individual that cannot be held liable for the debt.
3. Deceased. Debtor is deceased with no estate.
4. Invalid Referral. The account was assigned in error. A billing should not
have been generated.
5. Court Refuses Judgment. The debt could not be substantiated in court.
6. Outlawed. The statute of limitations has run out without payment or promise
of payment since the last transaction.
7. Amount Doesn’t Warrant Further Effort. No response to demand for payment.
Further pursuit would not be cost effective.
Each write off must be approved by the Finance Director.
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4 - INTERNAL CONTROL FOR INVESTMENTS AND BANKING SERVICES
INTERNAL CONTROL FOR INVESTMENTS
The City Treasurer/Finance Director and City Administrator shall, in accordance with the
Code of Iowa and the City’s Investment Policy, invest all idle funds of the City. For
purposes of internal control, the purchase of an investment shall be executed as
follows:
The City Treasurer/Finance Director shall:
1) Identify idle funds and determine possible length of investment (type of fund,
operating vs. reserve) and date of need
IF OPERATING:
2) If less than 30 days, deposit in savings account or interest bearing checking
account
If more than 30 days but less than 365 days, request quotes from the
qualified institutions as designated by the council, requesting rate and
calculation method
IF RESERVES OR BOND COVENANT
2a) If less than 30 days, deposit in savings account or interest bearing checking
account
If more than 30 days, get quotes from the qualified institutions as designated
by the Council, requesting rate and calculation method
NOTE: Check authorized investment types for this category of investment,
i.e., Bond Resolutions
3) Advise/consult with the City Administrator, term, quote on all rates and
recommended activity
4) Advise all participating institutions of quote results
5) If a wire transfer is to be made for an investment, the Accounting Manager is
to proof and verify these entries prior to posting into the accounting system.
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4- INTERNAL CONTROL FOR INVESTMENTS AND BANKING SERVICES
RECONCILIATION
The Accounting Assistant or Accounting Manager shall reconcile all investments
insuring that original documents of the transaction are received from the participating
institution and are consistent with monthly and/or quarterly statements.
Annually the Accounting Assistant shall reconcile the 1099/s received from all
institutions holding interest-bearing funds of the City and report the verification to the
City Treasurer.
Audit reports are vital and can identify for the Council those areas needing improvement
based on this, the investment and purchasing policies. Most audits:
1) Test for the accuracy of investment data obtained from third parties, especially
market prices
2) Test the accuracy of other information in investment reports, especially data that is
not reconcilable, such as CUSIP numbers
3) Test the adequacy of investment accounting and settlement controls
4) Test the accuracy of investment policy compliance
CONTROLS OVER BANKING SERVICES
Banking services shall be awarded through competitive bid to local banking institutions.
The most favorable institution must demonstrate security, efficiencies, community
commitment as well as favorable banking fees.
The Finance department shall monitor and record all banking activity for the City.
Security from thief or fraud is of utmost importance.
Types of Accounts to be used:
• General Deposit Account: This account is designed for cash deposits from the
City Clerk, pool, compost facility, and transit. No checks or outside party activity
will be allowed access to this account.
• Funnel Account: For those agencies and credit card vendors doing electronic
transactions with the City, this account has been established. No Checks or
cash deposits are allowed on this account.
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4- INTERNAL CONTROL FOR INVESTMENTS AND BANKING SERVICES
• Payable and Payroll Accounts: All checks written by the City for employees or
outside vendors will be written from these accounts. No electronic transactions
from outside agencies or cash deposits are allowed access to these accounts.
• DMV Account: This account is maintained for those deposits collected by the
DMV on behalf the City.
• Other miscellaneous accounts: From time to time various accounts may be
required by grantees or state statute.
Cash Disbursements:
All disbursements (including payroll), except for petty cash, are generated through the
accounting system by check or electronic payment. Check stock is pre-numbered and
with adequate physical control over unauthorized use. Those preparing checks are not
allowed to sign the checks or have access to the checking accounts from which they are
prepared.
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5 - DISCLAIMER CONCERNING ORDINANCE SECTIONS
DISCLAIMER CONCERNING ORDINANCE SECTIONS
All ordinance sections referenced within this policy are in effect as of the revision date of
the policy. If an ordinance is changed subsequent to the passage of this policy, all
published ordinances changes supersede what is written within this policy.
GUIDELINES FOR DELINQUENT (NON-PARKING)
ACCOUNTS RECEIVABLES
The following procedures will apply for all accounts that are past due:
• Stamp the statement with a “past due” notice for any accounts that are delinquent.
Include a summary sheet of what type of action will be taken if the account is not
paid in full.
• Charge interest after net 30 at a rate of one and one half percent (1 ½%) per month.
• Put the individual or business name on “hot sheet”. The names on the sheet will be
required to pay cash, certified check or credit card for all future transactions.
Individuals on the hot list may be denied city licenses and permits under Section 1-
12 of the Municipal Code.
• Net any amounts payable to the delinquent individual or business by the amount that
is owed to the City until the account is paid in full. Proper accounting procedures will
still be implemented to maintain accuracy for correct revenue and expenditure
classifications.
• For accounts delinquent in excess of $50, utilize the income offset program whereby
any income due from the state can be offset by the amount owed to the city.
• If all attempts for collection have failed, the amount should be written off and sent to
a third party collection agency. This should not be utilized until all other efforts have
been made since the local collection agency automatically receives 50% of the
amount sent to their agency.
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GUIDELINES FOR DELINQUENT (NON-PARKING)
ACCOUNTS RECEIVABLES
Rental Registration or inspection fees
• Cite for a municipal infraction fine based on the amount established in Code Section
15.5-5 (g & h) of the Code of Ordinances if not paid within 90 days (as of April 2000
the amount is set at $100.00).
• Under Iowa Code, 364.17 the City may charge a late payment fee of twenty-five
dollars and may add interest of up to one and one-half percent per month if a fine is
not paid within thirty days of the date that the fine is due. A notice of the late
payment fee shall be sent by first class mail to the owner’s personal or business
mailing address.
• Any unpaid penalty, fine, fee or interest constitutes a lien on the real property and
may be collected in the same manner as a property tax.
• Send a letter stating the “letter of compliance” will be revoked if not paid with 120
days. Issue a tenant eviction notice of not paid within the time frame. Based on
Code of Ordinance Section 15.5-5 (b, f & h).
License & Permits
• Cite for a municipal infraction. (Code Section 17-6 of City of Marshalltown Code of
Ordinances)
• Revoke license until payment is made to the City. Issue a letter to the offender
stating license will be revoked if not paid within 10 days of the letter.
• Attach a mechanic’s lien against the property.
False Alarms
• Cite for a municipal infraction based on Code section 17.245 of Code of Ordinances
(as of April 2000 the amount is $100.00 based on Code Section 1-8).
Nuisances
• Cite for a municipal infraction (Code Section 1-8)
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• Certify the costs to the county auditor to be collected in the same manner as general
property taxes (Code Section 21-71)
Rent Assistance Promissory Notes
• Issue a wage attachment or garnishment against the individual (if employment is
known).
Miscellaneous Undesignated
• Send to small claims court if the amount equals or exceeds $50.00
• Send to the local credit bureau collection agency for any amounts under $5035.00.
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GLOSSARY - CITY OF MARSHALLTOWN, IOWA
CODE OF ORDINANCES RELATIVE TO CASH MANAGEMENT
The code sections can be revised by the City Council at any time. Reference the
original Code of Ordinances for current wording. The date of the last revision is shown
for informational purposes.
Municipal Infractions
General Penalty Sec 1-8
• The doing of any act prohibited or declared to be unlawful, an offense or a
misdemeanor by this Code or any technical code herein adopted by reference, or
the omission or failure to perform any act, or duty required by this Code or any
technical code herein adopted by reference, is unless another penalty is specified,
punishable by a fine in a sum not exceeding one hundred dollars ($100.00) or
imprisonment not to exceed thirty (30 days.
State law reference-maximum penalty prescribed, ICA 364.3
Definition Sec 1-9 12-11-89
• (a) Municipal infraction: Any violation of the Code of Ordinances, City of
Marshalltown, Iowa, any ordinance or code adopted by reference or the Zoning
Ordinance of the City of Marshalltown, Iowa, or the omission or failure to perform
any act or duty required thereby, is a municipal infraction, except those provisions
specifically provided under state law as a felony, an aggravated misdemeanor, a
serious misdemeanor or a simple misdemeanor under Chapters 687 through 747 of
the Iowa Code, and is punishable by civil penalty as provided herein.
• (b) Repeat offense: A recurring violation of the same section of the Code of
Ordinances, City of Marshalltown, Iowa, any ordinance or code adopted by
reference or the Zoning Ordinance of the City of Marshalltown, Iowa, if the prior
offense was committed not more than twelve (12) months prior to the recurring
violation.
• (c) Officer: The term officer shall mean any employee or official authorized to
enforce the Code of Ordinances, City of Marshalltown, Iowa, any ordinance or code
adopted by reference or the Zoning Ordinance of the City of Marshalltown, Iowa.
Payment of Fees or Fines Sec 1-12 06-10-96
• Prior to the issuance of any license or permit by the city, the city clerk shall make a
diligent search of city records to determine if the applicant owes any fines or fees to
the city. If there are fines or fees due and owing, such fines and/or fees shall be
paid in full prior to he issuance of any license or permit.
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Application Sec 15.5-3
• This chapter applies to all rental dwelling units within the city, except hotels, motel,
or buildings owned by the State of Iowa or political subdivision thereof, state-
licensed health and custodial facilities and owner-occupied single-family dwellings.
• Violations and Penalties Sec 15.5-5 02-10-97 No owner
or operator shall rent or offer for rent any dwelling unit for use in whole or in part for
human habitation, unless a valid letter of compliance has been issued for any such
dwelling unit to the current owner, subject to the following exceptions:
1) Any dwelling unit in which a valid letter of compliance issued to a previous owner
is in effect at the time of acquisition by the current owner, and the current owner
has filed an application for a letter of compliance; or
2) Any dwelling unit in which a valid letter of compliance is not in effect at the time
of acquisition by the current owner and the current owner has filed an application
for a letter of compliance, and any of the following has occurred:
a) The housing inspector conducted an inspection of the dwelling unit, and it was
found to conform to the requirements of this chapter; or
b) After an inspection conducted by the housing inspector resulting in a finding
that the dwelling unit failed to conform to the requirements of this chapter, the
current owner entered into a written agreement with the housing inspector,
detailing a program to abate nonconformance with the requirements of this
chapter, and such agreement was successfully completed or is still in effect;
or
c) The housing inspector failed to conduct an inspection of the dwelling unit
within ten (1) working days from the filing of an application for a letter of
compliance for the dwelling unit by the current owner. However, if the
housing inspector thereafter conducts an inspection, the exception provided
by this subsection c shall no longer be in effect, and the requirements of
subsections (a) (2)b of this section shall apply.
Annual registration of residential rental property shall constitute an application for the
letter of compliance:
a) No person shall occupy, nor shall the owner or operator allow any person to
occupy, any dwelling unit more than thirty (30) days after the effective date of
the denial or revocation of a letter of compliance or that dwelling unit or after
the housing inspector finds that the vacation of the dwelling unit is necessary
before abatement of a nonconformance can reasonably proceed.
b) No person shall occupy, nor shall the owner or operator allow any person to
occupy, any dwelling unit in excess of the maximum occupancy permitted in
Section 15.5-40.
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c) No person shall permit a state of nonconformance to exist after the time set
by the housing inspector or abating the nonconformance.
d) No person shall fail to fulfill the specific obligations placed upon them by the
provisions of this chapter relating to minimum property standards, whether
they be owner, operator or occupant.
e) No owner of property regulated by this chapter shall fail or refuse to pay a fee
in the method and within the time required, prescribed by Section 15.5-8 and
applicable resolutions of the city council; nor shall any owner fail to submit a
completed registration form to the housing inspector, in accordance with the
requirements of Section 15.5-7.
f) Willful or repeated noncompliance with the requirements of this chapter by the
owner, operator, or occupant shall constitute a misdemeanor, punishable by a
fine of up to one hundred dollars ($100.00), or imprisonment up to thirty (30)
days in the county jail. Each day of noncompliance will constitute a separate
violation.
g) Persons in violation of sections 15.5-5(a) through (f) may, for each such
violation, be cited for a municipal infraction and be subject to such civil
penalties as defined in Section 364.22 of the most current Iowa Code. Such
persons shall also be liable in such case for all costs, expenses, and
disbursement of any such violation. Such persons shall also be liable to
eviction or to revocation of the letter of compliance.
h) The housing inspector, upon finding an apparent violation of this section, may
institute appropriate legal proceedings.
i) Application for a hearing under section 15.5-17 shall stay the effective date of
the enforcement of this section unless an emergency exists.
Yearly Registration Sec 15.5-7 8-23-93
a) The registration form shall request an updating of at least the same
information as required by section 15.5-6, and shall be submitted to the
housing inspector prior to July 31 of each year or within fourteen (14) days of
closure when acquiring residential rental property.
b) The housing inspector shall mail a registration form to all registered
residential property owners by July 1 of each year. The owner shall return the
completed registration form to the housing inspector within thirty (30) days of
receipt of same. Failure to complete or return the registration form shall
result in a revocation of the letter of compliance, or denial of the application
for the same and/or cited as a municipal infraction.
Fees Sec 15-5-8 8-23-93
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• There shall be established annually a reasonable schedule of fees for the purpose of
partially defraying the cost of inspection, enforcement and administration of the
provisions of this chapter. Said fee schedule and the times and methods for
payment thereof shall be established by resolution of the city council. Amounts due
and payable under said schedule of fees shall constitute a debt owned to the city
and may be enforced and collected as such. Failure or refusal to pay fees required
shall also constitute a violation of this section.
Licenses and Business Regulations-Penalty Sec 17-6
• Any person violating any of the provisions of this chapter or proceeding in a manner
different from, or contrary to the mode and procedure herein stated, or failing or
refusing to procure a license when required to do so by the provisions of this
chapter, or to do any of the acts for which a license is required herein without such
license, shall be deemed guilty of a misdemeanor and upon conviction thereof shall
be punished in accordance with section 1-8. The violation of any of the provisions of
this chapter on a separate and distinct days shall each be considered a separate
and distinct offense. The violation by the licensee or his employees of any of the
provisions of this chapter may be sufficient cause upon conviction for revocation of
the license by the mayor or council. The penalties provided herein are in addition to
any fees, charges, forfeitures or liabilities otherwise imposed.
False Alarms Sec 17-221 9-11-95
• Each alarm having its alarm terminate at the police station, either silent, telephonic,
or having an outside audible (local) alarm on the premises within the meaning of this
article will be allowed no more than two (2) in any calendar year. For every false
alarm over two (2) the responsible party shall be billed at a rate established by
resolution of the Council.. Said billing shall be made monthly by the city. An
authorized test of the alarm system shall not be considered a false alarm, providing
notice of such test has been relayed to the police department and approved by the
police department prior to said testing. The service fee shall be assessed against
the occupant of the address protected by the alarm. The police chief shall have
discretion to waive the service fee for good cause.
Alarm Devices Terminating at City Facilities Sec 17-224 9-11-95
• A burglar or holdup alarm may terminate and give a signal at the police station. Any
alarm company having such alarm panel terminating at the police station shall be
billed one thousand dollars ($1,000.00) per year for the service. The police chief
may set standards and rules regulations governing such equipment and may limit
the number of alarm systems so terminating.
Municipal Infraction Sec 17-245
• Any violation of this alarm systems article shall constitute a municipal infraction
punishable as a civil penalty as provided in the Marshalltown Code of Ordinances.
Public Nuisances - Definitions Sec 21-61 11-14-83
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• As used in this article, the following words and phrases shall have the meanings
ascribed to them in this section:
Nuisance shall mean whatever is injurious to health or safety, indecent or offensive to
the senses or an obstacle to the free use of property so as essentially to interfere with
the comfortable enjoyment of life or property. The following are declared to be
nuisances:
i) Dense growth of all weeds, vines, brush or other vegetation in the city so as to
constitute a health, safety, or fire hazard
ii) Inoperable or unlicensed vehicles found upon public private premises which are
not stored under a permanent roofed enclosure. Mere licensing of an inoperable
vehicle shall not constitute a defense to the finding that the presence of any
vehicle constitutes a nuisance.
Procedures for Collection Sec 21-71 4-11-74
• The clerk shall mail a statement of the total expense incurred to the real property
owner who has failed to abide by the notice to abate, and if the amount shown by
the statement has not been paid within 30 days, he shall certify the costs to the
county auditor and it shall then be collected with and in the same manner as general
property taxes.
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